A sharp rise in the number of individuals taking out Individual Voluntary Arrangements (IVAs) appears to be behind an increase in the total number of personal insolvencies in the first quarter of 2017.
The total number of personal insolvencies increased again in the first three months of 2017 with one in every 492 adults becoming insolvent.
Official statistics from the Insolvency Service showed that there were a total of 24,531 personal insolvencies in January, February and March 2017. This was an increase of 6.7% compared with the previous quarter.
There are a number of ways that individuals can go insolvent, but a big driver in Q1 of 2017 appears to be a significant jump in the number of IVAs.
An IVA is a formal agreement between an individual and their lenders, where the individual agrees to pay back all or part of their debt over a certain time period, usually 5 years.
More than 14,500 people organised an IVA in the first three months of 2017. That is a 12.5% increase on the last three months of 2016. IVAs have been getting more and more popular, with more people turning to Insolvency Practitioners for advice on tacking their debts.
The number of Debt Relief Orders (DROs), another form of insolvency, declined by 2% compared with the final quarter of 2016.
The number of bankruptcies rose slightly, increasing by 1.3% in Q1. But at 3,873, the number of Q1 bankruptcies has fallen steeply from 2009 levels, when the number of bankruptcies was close to 20,000.
The number of IVAs, by comparison, was higher in the last quarter than it was in any quarter since 2009.
Finding the right debt solution
IVAs appear to be more popular with individuals than other types of personal insolvency procedures, but just because more IVAs are taking place now doesn’t mean that that an IVA will be the right debt solution for everyone.
There are some advantages to IVAs over other types of insolvency such as keeping control of your assets. But agreeing to an IVA is only suitable in certain circumstances. The earlier you take advice, the greater the chance of your IVA being accepted by your creditors not to mention reducing your stress by taking control of your finances again.
If you would like to learn more about IVAs, or would like advice on whether or not an IVA might be suitable for you please get in touch. Call: 0800 611 8888.